Interaction with Regions

LUKOIL abides by the principles of social partnership and views the authorities in the Russian subjects and municipalities as its key partners engaged in the resolution of social and economic issues in the regions of its presence. The above approach is considered the groundwork for the social investment process.

From the early 2000s the Company has formalized the established practices of engagement in the social and economic development in the regions of the Company's presence in its cooperation agreements made with the authorities of Krais, Oblasts or the local authorities. The agreements cover a wide range of issues, including economic, production, infrastructure, social and others, including region-specific ones (e.g. support for the high north peoples). At its regular meetings with the regional authorities PJSC LUKOIL summarizes discharge of the obligations assumed by both parties under the agreements. LUKOIL is very scrupulous about fulfilment of its obligations, which is supported by the assessment of its partners.

A substantial share of the investments made under the agreements goes to development of the regions' social infrastructure, which includes construction and renovation of kindergartens, school, sports facilities, outpatient clinics and hospitals, cultural institutions, etc.

For instance, in 2012—2014 the Company in conjunction with the Regional Social Programs Fund "Our Future" completed a project which implied construction of six kindergartens with a total capacity of 1.5 thousand kids in Astrkhan, Perm, Kogalym, Saratov and regional centers in Volgograd Oblast, Kotovo and Nikolaevsk. Upon completion of the construction, the kindergartens were transferred to the municipal authorities. Their services are used by both LUKOIL personnel and the local people.

Another grand-scale social infrastructure development project launched in the regions is the construction of sports and recreation centers, such as "Volga Riverside" (the town of Kstovo in Nizhni Novgorod Oblast).

LUKOIL currently has valid agreements with the Republic of Kalmykia, Komi, Tatarstan, and Mordoviya, the authorities of Vologda, Moscow, Leningrad, Samara, Volgograd and Astrakhan Oblasts, Krasondar, Stavropol and Perm Krais, KhMAO-Yugra, NAO and YaNAO. For more details regarding performance of the social and economic cooperation agreements please refer to the 2013-2014 Report on Sustainable Development of the LUKOIL Group.

Subsidiaries operating outside of Russia also foster cooperation in nature management, environmental protection, and creation of an environment that will improve the existing living standards. LUKOIL Mid-East Ltd. has concluded cooperation agreements with the authorities in Medina, Al-Qurna and Iz Itdin Salim constituting the Iraqi Basra province that accommodates West Qurna-2.